Italian budget commission approves web tax on digital services

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ROME, Dec 19 (Reuters) - The budget commission of Italy’s lower house approved on Tuesday a provision obliging companies to pay a 3 percent tax on some internet transactions made in Italy.

Italy has long complained that companies such as Amazon , Apple and Google have avoided taxes by maintaining that they do not have a “stable presence” in the county, even though they generate huge revenues here.

To get around that problem, the new sales levy will be aimed at firms buying services in Italy. The so-called “web tax” will be introduced in 2019 and is projected to bring in 190 million euros ($224.2 million) a year.

The tax does not cover e-commerce, but rather “intangible digital products” such as advertising and sponsored links embedded in webpages. The finance ministry has said it will identify exactly which services are taxable by next April.

Companies will only have to pay up if they make more than 3,000 digital transactions in a year.

The measure is included in the 2018 budget bill, which has to be passed into law before the end of the year. The upper house Senate originally proposed a 6 percent tariff, but this was halved in the lower house.

Under EU law, corporate taxes are paid where firms have a physical presence, which allows large digital multinationals to book most of their profits in the low-tax countries where they have set up headquarters.

France, Germany, Italy and Spain are pushing to change the tax legislation, but are facing resistance from smaller nations like Luxembourg and Malta, which fear reform could hurt their economies.